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Today The Living Room, Tomorrow Your World: Why Microsoft's Xbox Is The Key To Windows 8

Years ago, had you asked consumers to define the Xbox, they might have called it a game console used to play Halo. Not anymore: Microsoft's hot hardware has evolved into an entertainment hub, a device not simply for multiplayer games but for TV, movies, music, and apps.

As many obervers have noted, with the Xbox Microsoft dove head first into the war for the living room—even out-gunning Apple and Google. But that understanding of Microsoft's strategy overlooks the other, arguably more important half of the battle: Microsoft's future on PCs, tablets, and smartphones. And as Microsoft unveiled Monday at E3, the Xbox is core to its success in these spaces—not just in the services it provides but the branding it boasts.

What's most intriguing about Microsoft's E3 announcements isn't all the extra features the company is bringing to the Xbox, but rather all the ways it's bringing the Xbox to its other platforms. At E3, Microsoft previewed the various ways it plans to port Xbox to Windows Phone and Windows 8: through three Metro-style apps (Video, Music, Games) and another called SmartGlass, an "application for Windows 8, Windows Phone, and other portable devices that connects phones, PCs and tablets with your Xbox 360 console....With Xbox on Windows 8, you can play games, listen to music, and enjoy...TV shows and movies wherever you go...And with Xbox SmartGlass, you can start a movie or TV show on your Windows 8 device and finish it on the big-screen TV."

In other words, Xbox is not a console anymore. It's wrong to think of it as hardware. It's software. It's a store, a hub for your entertainment where your credit card is saved and you're used to dropping an annual membership fee for access to premium content from services such as HBO Go, Netflix, and Hulu Plus. It's become Microsoft's version of iTunes. In a Steve Ballmer world, if you want to listen to a song or watch a movie—on your Windows smartphone, tablet, PC, or living-room console—you'll soon be clicking an Xbox app. Only unlike iTunes, which is only available on Apple's mobile devices, you'll be able to use Xbox on non-Windows devices thanks to SmartGlass, which will boast Airplay-like streaming on iOS and Android.

To be sure, Microsoft has long shown signs of these plans for Xbox—if you've been playing around with a Windows Phone or Windows 8 PC like I have, you've probably noticed how much Xbox has crept into the user experiences. But it's not only the connectivity and content that will give Microsoft a fighting chance in the mobile space and new lifeblood on the PC—Xbox is providing something the company has long lacked on both platforms: the right branding.

We've watched Microsoft fumble its "Live" branding (as in Windows Live, Windows Live Essentials), and grasp for dear life onto its "Zune" product name. Much to the confusion of consumers, on Windows Phone or Windows 8, there are apps for "Xbox LIVE Games," "Zune Music + Video," as well as a second string of seemingly disconnected, redundant generic services for music and video.

Microsoft is finally cleaning up its mess. Last month, Microsoft killed off its Live branding; yesterday, they finally offed Zune, the company confirmed. With these two (about-time!) executions, Microsoft has at last found a winner in digital branding: Xbox.

It's no small feat. Google has struggled for years to combine disparate products into a unified system—only now are Google Books, Music, and other services being fold into Google Play, along with the Android Marketplace and, soon hopefully, the Chrome Webstore. Sony failed to create an intuitive offering with the PlayStation Store and services like the hard-to-pronounce-even-harder-to-spell Qriocity, which it has since killed in hopes of stitching its array of products together under the umbrella of the (snooze-worthy) Sony Entertainment Network. And even Apple generified apps like "iPod" into "Music," after it became confusing as to why we were playing an iPod on an iPhone with music from iTunes.

Sure, Microsoft has a long way to go to implement this strategy successfully. And like other companies, it has to be careful not to create too much fragmentation within its own ecosystem. (In other words, is HBO Go now an app within Xbox or the Windows Marketplace?)

But the larger point here is that it's almost premature to say Microsoft has moved on from fighting the living room war with Xbox—arguably it's been winning that war for some time. We can't forget the company has been looking to get back into the mobile fight with Google and Apple through Windows 8 and Phone, and Xbox might just be the biggest dog it now has in that fight.

[Image: Flickr user Ttrentham]